Fremont, Calif., April 27, 2006 -- Oplink Communications, Inc. (Nasdaq: OPLK), a leading photonic components, intelligent modules, and subsystems solution provider, today reported financial results for the third quarter of fiscal 2006, ended April 2, 2006.
For the third quarter, Oplink reported revenues that increased 73% over the third quarter of the prior year and 15% sequentially to $14.6 million. Oplink reported net income of $1.0 million, or $0.05 per diluted share, for the third quarter of fiscal year 2006 in accordance with accounting principles generally accepted in the United States (GAAP). This compares to a GAAP net loss of $359,000, or ($0.02) per diluted share in the third quarter of fiscal 2005 and a GAAP net loss of $594,000, or ($0.03) per diluted share, reported in the second quarter of fiscal 2006.
Non-GAAP net income for the third quarter of fiscal 2006 was $2.1 million, or $0.09 per diluted share, which excludes $595,000 in stock compensation expense and $460,000 for the write down of assets held for sale. This compares to a non-GAAP net loss of $1.1 million, or ($0.05) per diluted share in the third quarter of fiscal 2005, which excludes $22,000 in stock compensation expense, a benefit of $904,000 related to a terminated acquisition and $163,000 for the net write down of assets held for sale and a non-GAAP net income of $1.2 million, or $0.05 per diluted share in the second quarter of fiscal 2006, which excludes $643,000 of stock compensation expense and $1.1 million of in-process research and development charges related to the acquisition of F3 Inc.
The Company closed the quarter with $184.5 million in cash, cash equivalents and short and long-term investments.
"We are quite pleased with the strength in our business in the third quarter, which was the result of improving market conditions and good demand across our customer base," commented Joe Liu, president and CEO of Oplink. "We had solid revenue contributions from customers like Huawei, Tellabs and Ciena. We continued to show improvements in gross margins and operating income, and are particularly pleased to report profitability on both a GAAP and non-GAAP basis.
"We are optimistic about the increasing strength in optical telecommunication and networking infrastructure spending. We continue to broaden our customer base as customers are increasingly attracted to our design-in model and integrated, low-cost manufacturing capabilities. As a result, we believe we are uniquely positioned to continue to gain market share as telecom/networking spending increases," concluded Liu.
The Company is planning for sequential revenue growth of approximately 10% to 12% in the fourth quarter of fiscal 2006, and expects to generate earnings per diluted share in the range of $0.08 to $0.09 on a GAAP basis. On a non-GAAP basis, excluding stock compensation expense and non-recurring charges, if any, the Company expects earnings per diluted share in the range of $0.10 to $0.11.
Oplink presents each of the fiscal quarters and fiscal year end as if it ended on the last day of each calendar quarter or twelve-month period, respectively. Oplink operates and reports using interim fiscal quarters and twelve-month periods, which end on the Sunday closest to the end of each calendar quarter and twelve-month period. April 2, 2006 was the Sunday closest to the period ended March 31, 2006. Historical per share data appearing above has been appropriately adjusted to reflect the one-for-seven (1-for-7) reverse stock split effected on November 9, 2005.
Conference Call Information
The Company will host a corresponding conference call and live webcast at 2:00 p.m. Pacific Time on April 27, 2006. To access the conference call, dial (866) 249-6463 for the US or Canada and (303) 205-0044 for international callers. The webcast will be available live on the Investor Relations section of the Company's corporate website at http://investor.oplink.com and via replay beginning approximately two hours after the completion of the call until the Company's announcement of its financial results for the next quarter. An audio replay of the call will also be available to investors beginning at approximately 5:00 p.m. Pacific Time on April 27, 2006 until 11:59 p.m. Pacific Time on April 30, 2006, by dialing (800) 405-2236 ((303) 590-3000 for callers outside the U.S. and Canada) and entering pass code 11058582.
Non-GAAP Financial Measures
In this earnings release and during our earnings conference call and webcast as described above, we use or plan to discuss certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A reconciliation between non-GAAP and GAAP measures can be found in the accompanying tables. We believe that, while these non-GAAP measures are not a substitute for GAAP results, they provide a basis for evaluating the Company's cash requirements for ongoing operating activities. These non-GAAP measures have been reconciled to the nearest GAAP measure as required under SEC rules. We compute non-GAAP net income (loss) by adjusting GAAP net income (loss) for merger fees, stock compensation expense, write down of assets held for sale and in-process research and development.
Incorporated in 1995, Oplink is a leading provider of design, integration and optical manufacturing solutions (OMS) for optical networking components and subsystems. The company offers advanced and cost-effective optical-electrical components and subsystem manufacturing through its facilities in Zhuhai and Shanghai, China. In addition, Oplink maintains a full complement of optical-centric front-end design, application, and customer service functions at its headquarters in Fremont, California. The company's customers include telecommunications, data communications and cable TV equipment manufacturers around the globe. Oplink is committed to providing fully customized, photonic foundry services incorporating its subsystems manufacturing capabilities. To learn more about Oplink, visit its web site at: http://www.oplink.com/.
This news release contains forward-looking statements, including without limitation statements regarding opportunities for continuing growth, an increase in telecommunications spending, the broadening of Oplink's customer base, Oplink's ability to win market share and the guidance given for anticipated revenue and earnings per share for the fourth quarter of fiscal 2006, that involve risks and uncertainties, which may cause Oplink's actual results to differ substantially from expectations. These risks include, but are not limited to, the potential widespread downturn in the overall economy in the United States and other parts of the world and the telecommunications industry, including reductions in telecommunication spending activity, possible reductions in customer orders, challenges to successfully integrate and realize anticipated benefits of acquisitions of businesses or technologies, Oplink's reliance upon third parties to supply components and materials for its products, intense competition in Oplink's target markets and potential pricing pressure that may arise from changing supply-demand conditions in the industry, the need to retain and motivate key personnel, and other risks detailed from time to time in Oplink's periodic reports filed with the Securities and Exchange Commission, including the company's latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
The foregoing information represents Oplink's outlook only as of the date of this press release, and Oplink undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.
Erica Abrams or Vanessa Lehr
The Blueshirt Group